"TOPA remains as important today as it was when it was created 45 years ago," DC Councilmember Brianne Nadeau said last year while introducing her own competing proposal to streamline the law. She was right that it's still central to how property changes hands in the District. She was also describing a law that, as of December 31, 2025, works very differently than it did the year before.
The headline version of that change is simple: small buildings got easier to sell. Duplexes, triplexes, and fourplexes now qualify for a new exemption from DC's Tenant Opportunity to Purchase Act, the law that has given renters a first shot at buying their building since 1980. Sellers and their agents have been repeating that headline all year. What gets left out is the one word doing all the work in the statute: individual. The exemption applies to 2-4 unit buildings that are not majority-owned by a business corporation. A large share of DC's small rental portfolio is held exactly that way, through an LLC, because that is the standard advice for anyone buying a rental property. The exemption that was supposed to speed up small-building sales does not cover the ownership structure most small investors actually use.
What Changed on December 31
The Rebalancing Expectations for Neighbors, Tenants, and Landlords Act, known as the RENTAL Act, took effect December 31, 2025, after clearing three readings at the DC Council. It rewrote large sections of TOPA. Two provisions matter most for anyone buying or selling a small rental building in DC right now.
The first is a 15-year exemption for any multifamily building, measured from the date its certificate of occupancy was issued, and applied retroactively. A building that got its CO ten years ago is exempt for five more years.
The second is the small-building exemption: 2-4 unit properties are exempt from the Offer of Sale process, but only if they are not owned in majority by a business corporation. Single-family homes have been mostly outside TOPA since 2018, when the Council carved them out except for elderly or disabled tenants under specific legacy protections. What's new in 2025 is the extension of that logic to small multifamily, with a condition that single-family exemptions never had to deal with: how the title is held.
The Test That Sinks Most LLC-Owned Duplexes
Ask a real estate attorney, an insurance agent, or frankly most closing tables in the DMV, and the standard guidance for a first-time landlord buying a rental duplex has been consistent for years: hold it in an LLC, keep personal liability separate from the property. That advice didn't change when the RENTAL Act passed. What changed is what it now costs at the exit.
Under the corporate-ownership test, a duplex titled to an individual person or a family trust can qualify for the small-building exemption. The identical duplex, same block, same two units, same tenants, titled to a single-member LLC, generally cannot. The statute measures majority ownership, not intent or liability structure, so the protective move that makes sense at acquisition is the same move that removes the shortcut at sale.
This is not a hypothetical edge case. It is the default way a meaningful share of DC's small rental stock is owned, because it is what asset protection planning recommends. The RENTAL Act's drafters were focused on distinguishing individual mom-and-pop owners from institutional landlords, and a corporate-ownership line was the tool they reached for. The side effect is that many owners who think of themselves as small landlords, because they own one building, will be treated as outside the exemption because of how that one building is titled.
Two Duplexes, Two Timelines
| Individually owned duplex | Same duplex, held in an LLC | |
|---|---|---|
| Exemption status | Qualifies for small-building exemption | Does not qualify |
| Required paperwork before listing | Notice of Transfer to existing tenants | Full Offer of Sale to tenants |
| Tenant response window | 45 days to register a tenant association and contest the Notice of Transfer | 45 days to form a tenant association, plus a cooling-off period before rights can be assigned |
| Fastest realistic path to a signed contract with a third party | Weeks, if the Notice of Transfer goes unchallenged | Months, once negotiation and financing periods are added |
Even the exempt path is not paperwork-free. A Notice of Transfer has to go to tenants, and they still get 45 days to register a tenant association and contest it. In practice, legitimate exemption claims are rarely challenged successfully, but the clock runs regardless of how the challenge resolves.
The Full Clock, If You're Not Exempt
For an LLC-owned 2-4 unit building, or any building that doesn't clear the exemption, the sequence looks like this once an Offer of Sale goes out:
- Tenants have 45 days to form a tenant association and file a Statement of Interest, or 30 days if an association already exists.
- A new cooling-off period, 22 days for 2-4 unit buildings, blocks the tenant association from assigning its purchase rights to an outside buyer until it passes.
- The tenant association gets 120 days to negotiate directly with the owner.
- If negotiations lead to a deal, or to an assignment of rights, the buyer typically needs another 120 to 240 days to secure financing, depending on the lender.
Add those stages up and a small multifamily sale that would otherwise close in 30 to 45 days can run past a year before a title company is anywhere close to a closing table. None of that is unique to 2026. What's new is that a building's owner now has a legal lever, corporate ownership status, that determines whether they face this sequence at all or skip most of it.
Restructuring Can Trigger the Same Clock
The RENTAL Act also drew a bright line for what counts as a sale in the first place: a transfer of majority ownership interest in an entity that owns a rental building as its principal asset is a sale for TOPA purposes, full stop. That means bringing on a new partner, buying out a co-owner, or recapitalizing an LLC that holds a rental building can trigger the same Offer of Sale requirement as an arm's-length sale to a stranger, even if the building itself never changes hands. Estate planning transfers to a spouse, domestic partner, or direct descendant are carved out, but ordinary business restructuring is not.
Regulations Are Still Being Written
DHCD is required to issue formal rules interpreting the RENTAL Act's provisions, and practitioners who met with the agency in early 2026 were told that process could take up to two years. In the meantime, DHCD is providing guidance on a rolling basis rather than through finished regulations, which means some of the harder edge cases, mixed ownership structures, entities with layered LLCs, recent recapitalizations, don't yet have a clean official answer. Any DC transaction involving a 2+ unit rental property in 2026 benefits from a title company and closing attorney who are actively tracking DHCD's guidance rather than working from the statute alone.
If You're Buying a Small DC Building to Live In
Owner-occupants shopping for a duplex or triplex with the plan to live in one unit and rent the others are affected by the same ownership test as pure investors. If the seller holds the property through an LLC, confirm the exemption status and required notices before writing an offer with a tight closing timeline. A seller's disclosure that the building is exempt is only as good as the ownership structure underneath it.
A Few Questions Worth Asking Before You Sign
Does this apply outside DC? No. TOPA is a District law. Maryland has its own, newer version, a tenant right of first refusal that took effect October 1, 2024, with different mechanics and timelines. Virginia transactions aren't governed by either statute.
If my rental is already in an LLC, is there a fix before I list it? That depends on how the entity is structured and how long ago it was formed, and it's a question for a real estate attorney and your title company, not something to guess your way through in a listing agreement.
Does TOPA still apply to single-family homes? Generally no. Single-family homes have been mostly exempt since 2018, with limited exceptions for elderly or disabled tenants under legacy provisions that predate the RENTAL Act.
If you're weighing a sale of a small DC rental building, or shopping for one, the ownership structure question belongs in the first conversation, not the closing table. ONE Residential works with sellers and investors across the DC metro who need a straight answer on timeline before they price a listing or write an offer. Schedule a consultation and we'll walk through what your specific building qualifies for before you're locked into a contract that assumes the wrong one.
